Transformative
Transaction Creates a Best in Class Gaming
Platform With Increased Diversification and Significant
Efficiencies of Scale Expected to be Accretive to
Pinnacle's Free Cash Flow and Earnings Per Share
Pinnacle Entertainment, Inc. (NYSE:PNK) and Ameristar Casinos, Inc.
(Nasdaq:ASCA) announced today that the companies have entered into
a definitive agreement under which Pinnacle will acquire all of the
outstanding common shares of Ameristar for $26.50 per share in
cash, for a total enterprise value of $2.8 billion, including debt
of $1.9 billion and cash on hand of $116 million as of September
30, 2012. This consideration represents a premium of 45% over the
average closing price of Ameristar common stock for the 90 days
ended December 20, 2012. The transaction has received the unanimous
approval of both the Ameristar and Pinnacle Boards of
Directors.
Pinnacle will benefit from increased operational and geographic
diversity by more than doubling in size to 17 operating properties
in 13 distinct geographies. The acquisition of Ameristar's
properties will complement Pinnacle's existing portfolio by adding
eight casino-resorts in some of the nation's best gaming markets,
including: St. Charles near St. Louis, MO; Kansas City, MO; Council
Bluffs, IA; Black Hawk, CO; Vicksburg, MS; East Chicago, IN; and
Jackpot, NV.
The consideration represents an EBITDA multiple of 7.6x
Ameristar's Adjusted EBITDA of $365 million for the trailing
12-month period ended September 30, 2012, excluding synergies
Pinnacle expects to achieve. The combined enterprise would have
generated net revenue of $2.4 billion and Combined Adjusted EBITDA
of $649 million (excluding $40 million of synergies Pinnacle
expects to achieve), over the trailing 12-month period ended
September 30, 2012.
Anthony Sanfilippo, President and Chief Executive Officer of
Pinnacle Entertainment commented, "The acquisition of Ameristar is
a transformative transaction for Pinnacle that will provide us the
scale and diversification to more effectively compete. The coupling
of Pinnacle and Ameristar properties will create a terrific
portfolio of quality assets to serve our combined guests. Over
recent years, we have made tremendous progress at Pinnacle in
providing a higher level of service to our guests and improving our
financial performance. We are thrilled about the opportunities that
will be created by combining the two companies. Both companies
have developed cultures where team members are focused on providing
a high quality experience to their guests and delivering
outstanding financial outcomes for their shareholders. Our
operating philosophy and cultures are perfectly aligned.
"We believe the transaction represents a uniquely attractive
opportunity for Pinnacle and its shareholders given the
significantly improved geographic and operational diversification
of the combined portfolios," continued Mr. Sanfilippo. "In
addition, we believe there is considerable opportunity to expand
reach and generate synergies and efficiencies of scale from the
increased size of the combined company, as well as an opportunity
to drive property margin expansion by applying best practices
garnered from both Pinnacle and Ameristar across the combined
enterprise. As a result of the combination, we expect to
achieve synergies and efficiencies of scale of at least $40 million
annually, with potentially greater realization as we move forward
through the integration process. Finally, we expect the
acquisition of Ameristar to be accretive to our free cash flow and
earnings per share following the closing, and for it to provide
increased long-term strategic and financial flexibility. We
are confident this transaction will drive long-term value for
Pinnacle's stakeholders."
Gordon Kanofsky, Chief Executive Officer of Ameristar Casinos
commented, "We are excited to have reached this agreement with
Pinnacle as this transaction maximizes value for our shareholders
and provides them with a significant and immediate premium.
We are focused on ensuring a smooth transition and look forward to
working with the Pinnacle team. The increased scale and
diversification of the Company will expand opportunities for our
team members and provide enhancements for our guests."
The transaction is subject to customary closing conditions,
approval by Ameristar's shareholders and required regulatory
approvals. Pinnacle expects the transaction to close by the end of
the third quarter of 2013. Pinnacle has obtained committed
financing for the transaction and the transaction is not subject to
a financing contingency.
Financial and Legal Advisory
Goldman, Sachs & Co. served as the exclusive financial
advisor and Morrison & Foerster LLP served as the legal advisor
to Pinnacle. J.P. Morgan and Goldman, Sachs & Co. provided
the committed financing for the transaction.
Lazard and Centerview Partners LLC served as financial advisors
to Ameristar and Gibson Dunn & Crutcher LLP served as legal
counsel to Ameristar.
Investor Conference Call
Pinnacle and Ameristar will host a joint conference call for
investors today, Friday, December 21, 2012, at 9:00 a.m. (Eastern
Time) / 6:00 a.m. (Pacific Time) to discuss the proposed
acquisition. Investors can listen to the call by dialing (706)
679-7241. The code to access the conference call is
84097297. Investors may also listen to the conference call
live over the Internet at either www.pnkinc.com or
www.ameristar.com. A presentation that will be discussed on
the call will be available in the Investor Relations section of
Pinnacle's website.
A replay of the conference call will be available shortly after
the conclusion of the call through January 4, 2013 by dialing (404)
537-3406. The code to access the replay is 84097297. The
conference call will also be available for replay at
www.pnkinc.com.
About Pinnacle Entertainment
Pinnacle Entertainment, Inc. owns and operates seven casinos,
located in Louisiana, Missouri, and Indiana, and a racetrack in
Ohio. In addition, Pinnacle is redeveloping River Downs in
Cincinnati, Ohio into a gaming entertainment facility and holds a
26% ownership stake in Asian Coast Development (Canada) Ltd.
(ACDL), an international development and real estate company
currently developing Vietnam's first large-scale integrated resort
on the Ho Tram Strip.
The Pinnacle Entertainment, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=13121
About Ameristar Casinos
Ameristar Casinos is an innovative casino gaming company
featuring the newest and most popular slot machines. Ameristar has
7,200 dedicated team members who pride themselves on delivering
consistently friendly and appreciative service to their guests.
Ameristar continuously strives to increase the loyalty of its
guests through the quality of its slot machines, table games,
hotel, dining and other leisure offerings. Ameristar's eight casino
hotel properties primarily serve guests from Colorado, Idaho,
Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri,
Nebraska and Nevada. Ameristar has been a public company since
1993, and its stock is traded on the Nasdaq Global Select Market.
Ameristar generates more than $1.1 billion in net revenues
annually.
The Ameristar Casinos, Inc. Logo is available a
http://www.globenewswire.com/newsroom/prs/?pkgid=16403
Additional Information and Where to Find It
In connection with the proposed merger, Ameristar plans to file
a proxy statement with the SEC and mail the proxy statement to its
stockholders. INVESTORS AND STOCKHOLDERS ARE URGED TO READ THE
PROXY STATEMENT AND OTHER PROXY MATERIALS WHEN THEY BECOME
AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
PINNACLE, AMERISTAR, THE PROPOSED MERGER AND RELATED
MATTERS. The proxy statement, as well as other filings
containing information about Pinnacle and Ameristar will be
available, free of charge, from the SEC's web site
(www.sec.gov). Pinnacle's SEC filings in connection with the
transaction also may be obtained, free of charge, from Pinnacle's
web site (www.pnkinc.com) under the tab "Investor Relations" and
then under the heading "SEC Filings," or by directing a request to
Pinnacle, 8918 Spanish Ridge Ave., Las Vegas, Nevada, 89148,
Attention: Investor Relations or (702) 541-7777. Ameristar's
SEC filings in connection with the transaction also may be
obtained, free of charge, from Ameristar's web site
(www.ameristar.com) under the tab "About Us," "Investor Relations"
and then under the heading "Ameristar SEC Reports & Filings,"
or by directing a request to Ameristar, 3773 Howard Hughes Parkway,
Suite 490 South, Las Vegas, Nevada, 89169, Attention: Investor
Relations or (702) 567-7000.
Participants in the Merger Solicitation
Pinnacle and Ameristar and their respective directors and
executive officers and other persons may be deemed to be
participants in the solicitation of proxies in connection with the
proposed merger. Information about Pinnacle's directors and
executive officers is included in Pinnacle's Annual Report on Form
10-K/A for the year ended December 31, 2011, filed with the SEC on
May 16, 2012 and the proxy statement for Pinnacle's 2012 Annual
Meeting of Stockholders, filed with the SEC on April 9,
2012. Information about Ameristar's directors and executive
officers is included in Ameristar's Annual Report on Form 10-K for
the year ended December 31, 2011, filed with the SEC on February
28, 2012 and the proxy statement for Ameristar's 2012 Annual
Meeting of Stockholders, filed with the SEC on April 30,
2012. Additional information regarding these
persons and their interests in the merger will be included in the
proxy statement relating to the merger when it is filed with the
SEC. These documents can be obtained free of charge from the
sources indicated above.
Non-GAAP Financial Measures
Consolidated Adjusted EBITDA, Free Cash Flow and Adjusted
EBITDA are non-GAAP measurements. Pinnacle defines Consolidated
Adjusted EBITDA as earnings before interest income and expense,
income taxes, depreciation, amortization, pre-opening and
development expenses, non-cash share-based compensation, asset
impairment costs, write-downs, reserves, recoveries,
corporate-level litigation settlement costs, gain (loss) on sale of
certain assets, loss on early extinguishment of debt, gain (loss)
on sale of equity security investments, minority interest and
discontinued operations. Pinnacle defines Free Cash Flow as
Consolidated Adjusted EBITDA less maintenance capital expenditures,
cash taxes and cash interest expense.
Ameristar defines Adjusted EBITDA as earnings before interest,
taxes, depreciation, amortization, other non-operating income and
expenses, stock-based compensation, deferred compensation plan
expense, non-operational professional fees and river flooding
expenses and reimbursements.
As shown above, Combined Adjusted EBITDA is presented based on
the combination of Pinnacle's Consolidated Adjusted EBITDA and
Ameristar's Adjusted EBITDA for the trailing 12-month period ended
September 30, 2012, taking into account synergies Pinnacle expects
to achieve.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements are based on Pinnacle's
and Ameristar's current expectations and are subject to uncertainty
and changes in circumstances. These forward-looking statements
include, among others, statements regarding the expected synergies
and benefits of a potential combination of Pinnacle and Ameristar,
including the expected accretive effect of the merger on Pinnacle's
financial results and profile (e.g., free cash flow, earnings per
share and Consolidated Adjusted EBITDA); the anticipated benefits
of geographic diversity that would result from the merger and the
expected results of Ameristar's gaming properties; expectations
about future business plans, prospective performance and
opportunities; required regulatory approvals; the expected timing
of the completion of the transaction; and the anticipated financing
of the transaction. These forward-looking statements may be
identified by the use of words such as "expect," "anticipate,"
"believe," "estimate," "potential," "should", "will" or similar
words intended to identify information that is not historical in
nature. The inclusion of such statements should not be
regarded as a representation that such plans, estimates or
expectations will be achieved. There is no assurance that the
potential transaction will be consummated, and there are a number
of risks and uncertainties that could cause actual results to
differ materially from the forward-looking statements made
herein. These risks and uncertainties include (a) the timing
to consummate a potential transaction between Pinnacle and
Ameristar; (b) the ability and timing to obtain required regulatory
approvals (including approval from gaming regulators) and satisfy
or waive other closing conditions; (c) the ability to obtain the
approval of Ameristar's stockholders; (d) the possibility that the
merger does not close when expected or at all; or that the
companies may be required to modify aspects of the merger to
achieve regulatory approval; (e) Pinnacle's ability to realize the
synergies contemplated by a potential transaction; (f) Pinnacle's
ability to promptly and effectively integrate the business of
Pinnacle and Ameristar; (g) the requirement to satisfy closing
conditions to the merger as set forth in the merger agreement,
including expiration of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976; (h)
uncertainties in the global economy and credit markets and its
potential impact on Pinnacle's ability to finance the transaction;
(i) the outcome of any legal proceedings that may be instituted in
connection with the transaction; (j) the ability to retain certain
key employees of Ameristar; (k) that there may be a material
adverse change affecting Pinnacle or Ameristar, or the respective
businesses of Pinnacle or Ameristar may suffer as a result of
uncertainty surrounding the transaction; (l) Pinnacle's ability to
obtain financing on the terms expected, or at all; and (m) the risk
factors disclosed in Pinnacle's most recent Annual Report on Form
10-K/A, which Pinnacle filed with the Securities and Exchange
Commission on May 16, 2012 and the risk factors disclosed in
Ameristar's most recent Annual Report on Form 10-K, which Ameristar
filed with the Securities and Exchange Commission on February 28,
2012,3 and in all reports on Forms 10-K, 10-Q and 8-K filed with
the Securities and Exchange Commission by Pinnacle and Ameristar
subsequent to the filing of their respective Form 10-Ks for the
year ended December 31, 2011. Forward-looking statements reflect
Pinnacle's and Ameristar's management's analysis as of the date of
this release. Pinnacle and Ameristar do not undertake to revise
these statements to reflect subsequent developments, except as
required under the federal securities laws. Readers are
cautioned not to place undue reliance on any of these
forward-looking statements.
Visit Pinnacle Entertainment's website at www.pnkinc.com or
Ameristar Casinos' website at www.ameristar.com (which shall not be
deemed to be incorporated in or a part of this news release).
CONTACT: Pinnacle Entertainment Contacts:
Investor Relations
Vincent J. Zahn, CFA
Vice President, Finance and Investor Relations
(702) 541-7753 or investors@pnkmail.com
Media Relations
Sard Verbinnen & Co
Paul Kranhold or Ron Low
(415) 618-8750
Ameristar Casinos Contacts:
Investor Relations
Thomas Steinbauer
Senior Vice President, Chief Financial Officer
(702) 567-7030 or tom.steinbauer@ameristar.com
Media Relations
Roxann M. Kinkade, APR
Director of Communications
(816) 414-7007 or roxann.kinkade@ameristar.com
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